Re: Request for feedback on potential apartment property purchase

[LEONID ORLOV]

I reside in LA my experience with self-managing 25 units located in 3-4 properties in LA. Pricing in LA compels me expand my horizons to out of state properties. I am very new to both, remote property acquisition and management and proceed on this path with a degree of trepidation. Although, many on this site report positive outcomes.

I could use a word of wisdom on how one proceeds with this venture without making predictable mistakes.

I would greatly appreciate feedback on the proposed deal:

Sale Price $980,00

Price Per Unit $35,00

Price Per Foot $41.26

CAP Rate 7.1%

GRM 4.86x

Building Size 23,750 SF

Lot Size 43,124 s.f.

Year Built 1969

City Desoto TX

Gross Scheduled Income $201,424

Other Income 703

Total Scheduled Income 202,127

Vacancy Cost (28,610)

Gross Income 173,517

Operating Expenses (103,682)

Net Operating Income $69,836

[Joel Owens]

I don't like it.

It's built in 1969 which has it's own issues.

7.1 cap rate on that age of property is weak. I usually have that age vintage in the 8's or 9's.

They have and incredible amount of operating expenses with vacancy.

28 units managing from afar does not allow proper structure in place for a full time manager and maintenance person.

They have at about 61% but if other capex or problems are coming that cap could go to a 6 etc.

I do not know that are so if it is in an amazing area and sitting on a bunch of land the dirt might make up for it. My quick one minute look.